CIS Tax Refunds: How Construction Workers Can Claim Back Overpaid Tax

If you’re working in construction under the CIS scheme, there’s a good chance HMRC owes you money. Every year, thousands of construction workers overpay tax because contractors deduct 20% or 30% from every payment—often far more than they actually owe.

The good news? You can claim that money back. This guide will show you exactly how CIS tax refunds work, who qualifies, what you can claim, and the step-by-step process to get your money back from HMRC.

What Is the Construction Industry Scheme (CIS)?

The Construction Industry Scheme is HMRC’s way of collecting tax from subcontractors in the construction industry. Instead of you paying tax at the end of the year, your contractor deducts it from your pay before you receive it.

How much is deducted: - 20% if you’re registered with CIS (most subcontractors) - 30% if you’re not registered (unverified workers) - 0% if you have gross payment status (rare, requires meeting strict conditions)

These deductions go straight to HMRC and count towards your annual tax bill. But here’s the problem: the deductions don’t account for your business expenses, allowances, or actual tax liability. That’s why most CIS workers end up overpaying.

Why Do CIS Workers Overpay Tax?

Let’s say you earn £30,000 in a tax year. Your contractors have already deducted 20%, so £6,000 has gone to HMRC.

But when you file your Self Assessment tax return, you can claim allowable business expenses—tools, travel, equipment, insurance, and more. Let’s say your expenses total £8,000.

Your actual taxable profit: £30,000 - £8,000 = £22,000

After your Personal Allowance (£12,570), you’re only taxed on £9,430. Your actual tax bill is around £1,886 in Income Tax plus National Insurance—far less than the £6,000 already deducted.

Result: You’re owed a refund of over £4,000.

This scenario plays out for thousands of construction workers every year. If you’re not claiming your expenses and filing a tax return, you’re leaving money on the table.

Who Can Claim a CIS Tax Refund?

You can claim a CIS refund if:

· You’ve worked as a subcontractor under CIS and had tax deducted (20% or 30%)

· Your business expenses reduce your taxable profit below what was deducted

· You’ve overpaid Income Tax or National Insurance

· You file a Self Assessment tax return showing your income, expenses, and CIS deductions

Even if you’ve stopped working in construction, you can still claim refunds for up to four years from the end of the relevant tax year. So if you worked in 2022/23 and never claimed, you have until January 2028 to file and get your refund.

What Expenses Can CIS Workers Claim?

The key to maximizing your CIS refund is claiming every allowable expense. HMRC allows you to deduct costs that are “wholly and exclusively” for your business.

Common CIS Expenses:

Tools and Equipment: - Hand tools (hammers, drills, saws, trowels, levels) - Power tools and machinery - Tool repairs and replacements - Safety equipment (hard hats, boots, gloves, hi-vis)

Vehicle and Travel: - Fuel for business journeys (between job sites) - Vehicle insurance, repairs, and maintenance - Van hire or lease payments - Parking and tolls for work travel - Mileage allowance (45p per mile for first 10,000 miles)

Clothing and PPE: - Work boots and protective clothing - Replacement of damaged workwear - Laundry costs for work clothes

Training and Licenses: - CSCS cards and renewals - Health and safety courses - Trade certifications and training

Materials (if you supply them): - Bricks, cement, paint, timber, etc. - Small materials purchased for jobs

Other Business Costs: - Public liability insurance - Professional subscriptions (trade bodies) - Accountancy fees - Mobile phone (business use portion) - Accommodation and meals (if working away from home)

Important: You cannot claim for travel from home to your regular workplace, or for personal expenses. Keep receipts and records for everything you claim.

How to Claim Your CIS Tax Refund: Step-by-Step

Step 1: Register for Self Assessment

If you haven’t already, you need to register with HMRC for Self Assessment. You can do this online at gov.uk. You’ll receive a Unique Taxpayer Reference (UTR) number within 10 days.

Deadline: Register by 5 October after the end of the tax year you’re claiming for.

Step 2: Gather Your Documents

You’ll need: - CIS statements from every contractor you worked for (showing income and deductions) - Receipts and invoices for all business expenses - Bank statements (if needed to verify expenses) - Mileage log (if claiming vehicle expenses)

Your contractors should provide CIS statements monthly or at the end of the tax year. If you don’t have them, contact your contractors or check your HMRC online account.

Step 3: Complete Your Self Assessment Tax Return

You can file online through HMRC’s website or use accounting software. You’ll need to:

· Report all your CIS income (gross amount before deductions)

· Enter the total CIS deductions already paid

· Claim all your allowable business expenses

· Calculate your actual tax liability

HMRC will compare what you’ve already paid (via CIS deductions) with what you actually owe. If you’ve overpaid, they’ll calculate your refund automatically.

Deadline: 31 January following the end of the tax year (e.g., 31 January 2027 for the 2025/26 tax year).

Step 4: Receive Your Refund

Once HMRC processes your return (usually within 5-6 weeks), they’ll send your refund directly to your bank account. If you’re owed money, you’ll typically receive it within 5 weeks of filing.

Can you claim early? In some cases, yes. If you’ve stopped working or have very low income for the rest of the year, you can apply for an in-year refund before the tax year ends.

Common Mistakes That Reduce Your CIS Refund

1. Not claiming all allowable expenses Many workers only claim the obvious costs (tools, fuel) and miss out on insurance, training, PPE, and other legitimate expenses.

2. Losing receipts No receipt = no claim. Keep digital copies or photos of every receipt throughout the year.

3. Filing late or not at all If you don’t file a tax return, HMRC keeps your money. Thousands of pounds sit unclaimed every year because workers assume they don’t need to file.

4. Mixing personal and business expenses Only claim the business portion of expenses like mobile phones or vehicle costs. HMRC can challenge claims that look personal.

5. Not keeping mileage records If you’re claiming mileage, you need a log showing dates, destinations, and miles travelled for work.

What About Making Tax Digital (MTD) from April 2026?

From April 2026, self-employed individuals earning over £50,000 (including CIS workers) will need to file quarterly digital tax returns under Making Tax Digital for Income Tax (MTD IT). The threshold drops to £30,000 from April 2027.

What this means for CIS workers: - You’ll need to use MTD-compatible software to track income and expenses - You’ll submit updates to HMRC quarterly instead of once a year - Your CIS deductions will still apply, but you’ll have a clearer picture of refunds throughout the year

If you’re earning above these thresholds, it’s worth getting ahead of MTD now by using digital accounting tools or working with an accountant.

How Much Could You Get Back?

Refund amounts vary, but here are some realistic examples:

Example 1: Labourer earning £25,000 - CIS deductions: £5,000 (20%) - Expenses claimed: £4,000 (tools, travel, PPE) - Actual tax owed: £2,486 - Refund: £2,514

Example 2: Skilled tradesperson earning £40,000 - CIS deductions: £8,000 (20%) - Expenses claimed: £10,000 (van, fuel, tools, insurance) - Actual tax owed: £5,486 - Refund: £2,514

Example 3: Unregistered worker earning £20,000 - CIS deductions: £6,000 (30%) - Expenses claimed: £3,000 - Actual tax owed: £1,886 - Refund: £4,114

The more expenses you can legitimately claim, the bigger your refund. And if you haven’t claimed for previous years, you could be owed thousands.

Can You Claim for Previous Years?

Yes. You can claim CIS refunds for up to four years after the end of the tax year. So in 2026, you can still claim for: - 2025/26 - 2024/25 - 2023/24 - 2022/23

If you’ve never filed a tax return and worked under CIS during these years, you could have multiple refunds waiting.

Get Expert Help with Your CIS Tax Refund

Filing a Self Assessment tax return can feel overwhelming, especially if you’re doing it for the first time or trying to claim for multiple years. Missing expenses or making errors can cost you hundreds—or even thousands—of pounds.

At TLC Centre, we specialize in helping construction workers and CIS subcontractors claim every penny they’re owed. With over 20 years of accounting experience, we know exactly what you can claim and how to maximize your refund.

Our CIS tax return service includes: - Full review of your income and CIS deductions - Identification of all allowable expenses - Preparation and filing of your Self Assessment tax return - Direct communication with HMRC if needed - Unlimited email support throughout the process

Pricing: From £200 per year for self-employed individuals, including CIS workers.

We also handle late returns, multiple-year claims, and complex situations (multiple income sources, property income, etc.).

Not sure if you’re owed a refund? Book a 60-minute free business consulting session. We’ll review your situation, estimate your potential refund, and give you a clear action plan.

Ready to claim your CIS refund?

Contact us today: - Call or WhatsApp: +44 7897 901778 Visit: https://tlcentre.uk